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Pub Prices too Low?

July 18, 2006 - Brewing giant InBev has told British pub operators they should be charging more for beer because consumers are willing to pay more.

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Steve Kitching, managing director of on-trade sales, said some pub managers treat beer "like petrol" and have a "price point ceiling in mind, which they are wary of breaching."

An InBev spokeswoman denied his statements forecast the brewing company is about to raise prices. InBev's Stella Artois is the top-selling lager in the UK.

"Traditionally, retail pricing was determined purely on margin terms based on retailers' need to make a certain percentage profit," Kitching. "Today it's more about what consumers are willing to pay, but there is still some way to go."

Kitching suggests pubs establish a "ladder of price points" trade consumers up to beers with higher margins.

Steve Martin, who managed beer sales for the Punch Taverns chain, said Kitching was not taking into account the popularity of cheap prices in supermarkets.

"In theory the principle is the right one," Martin said. "However, the expectation of the customer paying more for their liquid may not work. Just look at off-trade volumes and off-trade prices."


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